UNITED STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE COMMISSION
SECURITIES EXCHANGE ACT OF 1934
Release No. 39901 / April 22, 1998
ADMINISTRATIVE PROCEEDING
File No. 3-9580
_____________________________________
:
:
In the Matter of:ORDER INSTITUTING
:ADMINISTRATIVE PROCEEDING:PURSUANT TO SECTIONS
JEFFREY A. LOBEL, Respondent.:15(b)(6) AND 19(h) OF THE
:SECURITIES EXCHANGE ACT:OF 1934, MAKING FINDINGS,
:AND IMPOSING REMEDIAL SANCTIONS
:
____________________________________:
I.
The Securities and Exchange Commission ("Commission") deems it
appropriate and in the public interest to institute a public
administrative proceeding pursuant to Sections 15(b)(6) and
19(h) of the Securities Exchange Act of 1934 ("Exchange Act")
against Jeffrey A. Lobel ("Lobel" or the "Respondent").
Accordingly, IT IS HEREBY ORDERED that said proceeding be, and
hereby is, instituted.
II.
In anticipation of the institution of this proceeding,
Respondent has submitted an Offer of Settlement ("Offer") which
the Commission has determined to accept. Solely for the purpose
of this proceeding and any other proceedings brought by or on
behalf of the Commission, or in which the Commission is a party,
without admitting or denying the findings contained herein,
except that Respondent admits the jurisdiction of the Commission
over him and over the subject matter of this proceeding and
admits the entry of the permanent injunction set forth in
paragraph III.C., Respondent consents to the entry of the
findings and remedial sanctions set forth below.
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III.
On the basis of this Order and Respondent's Offer, the
Commission finds that:[/]
A. From approximately May 19, 1992 through October 8, 1995,
Lobel was a registered representative associated with Select
Investor Capital, Inc., a California corporation and broker-
dealer formerly registered with the Commission, located in
Woodland Hills, California.
B. From approximately July 1, 1993 through at least May 15,
1995, Lobel co-owned and operated Direct Participation Services,
Inc. d/b/a Government Financial ("GF"),
a Delaware corporation, located in Woodland Hills, California.
C. On April 14, 1998, a Judgment of Permanent Injunction and
Other Relief ("Judgment") was entered in the United States
District Court for the Central District of California against
Lobel. The Judgment permanently enjoins Lobel from violations
of Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933
("Securities Act"), Section 10(b)
of the Exchange Act and Rule 10b-5 thereunder. SEC v. Direct
Participation Services, Inc. et al., Civil Action No. 96-6594
LGB (Mcx) (C.D. Cal.).
D. The Commission's Complaint filed in the action described
above alleges, among other things, that throughout the period
specified in paragraph III.B., Lobel and others caused GF to
offer and sell approximately $26 million of nine-month
promissory notes ("Notes") to approximately 750 investors
through three offerings.
E. The Complaint further alleges that, at the time the Notes
were offered and sold,
no registration statement covering the Notes had been filed or
was in effect. Instead, the Notes were sold in purported
reliance upon Section 3(a)(3) of the Securities Act. The
Section 3(a)(3) exemption was unavailable, however, since the
Notes were: (1) not prime quality negotiable commercial
paper; (2) offered and sold to the general public; and (3) not
issued to facilitate
well recognized types of current operational business
requirements. Nor was any other exemption from the
registration requirements of Sections 5(a) and 5(c) of the
Securities Act available.
F. The Commission's Complaint also alleges that Lobel and
others misrepresented and omitted to disclose material facts to
investors, concerning, among other things: (1) the status and
duties of a purportedly independent trustee; (2) the percentage
of accounts receivable payable by governmental entities; (3)
noteholders' security interest in assets acquired by GF; (4) the
existence of credit insurance for accounts not payable by
governmental entities; and
(5) the use of investor proceeds for related party transactions.
**FOOTNOTES**
[/]:/The findings herein are made pursuant to Respondent's Offer and are
not binding on any other person or entity named as a respondent in this or
any other proceeding.
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IV.
Based upon the foregoing, the Commission deems it appropriate
and in the public interest to impose the sanctions specified in
Respondent's Offer.
Accordingly, IT IS HEREBY ORDERED that Respondent Lobel be, and
hereby is, barred from association with any broker, dealer,
municipal securities dealer, investment adviser or investment
company, with the right to reapply for association after five
years to the appropriate self-regulatory organization, or if
there is none, to the Commission.
By the Commission.
Jonathan G. Katz
Secretary
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